EFERio de Janeiro

The federal prosecutor leading a sprawling investigation into the payment of bribes for inflated Petrobras contracts on Wednesday accused former Brazilian President Luiz Inacio Lula da Silva of orchestrating the corruption scheme that cost the state oil company billions of dollars.

"The federal prosecutors' office today accuses Lula of being the top commander of the corruption scheme known as Car Wash," Deltan Dallagnol said at a press conference in the southern city of Curitiba.

The charges of bribery and money laundering were leveled against Lula, his wife, Marisa Leticia, and seven other people.

The prosecutor said he had evidence Lula received 3.7 million reais (around $1.1 million) in benefits from construction company OAS.

That firm was one of a score of major companies that allegedly overcharged the oil giant for contracts and split the extra money with corrupt Petrobras executives while setting aside some of the loot to pay off politicians who provided cover for the graft.

OAS bought, refurbished and furnished a luxury three-story beachfront apartment for the ex-president, according to the federal prosecutor, who said Lula had made the down payment on the property located in the southeastern state of Sao Paulo.

That same construction company also paid the rental fees for a warehouse where over a period of five years Lula stored the gifts he received during his 2003-2010 presidency, the prosecutor said.

Those benefits were payment for three refinery contracts totaling 87 million reais (some $26.4 million) that were illegally awarded to OAS, Dallagnol added.

The prosecutor said Petrobras' total losses stemming from the inflated contracts amounted to roughly 42 billion reais (some $12.7 billion).

Attorneys for Lula, who has steadfastly denied the corruption allegations, said in a statement Wednesday that the federal charges were politically motivated and groundless.

Referring to the beachfront triplex, they said prosecutors had provided no evidence that the apartment in question belonged to Lula, adding that the former head of state had paid only one visit to the property when it was under construction and he was considering whether or not to purchase it.